OPEC pans biofuels programmes in industrialised nations
OPEC has sharply criticised the biofuels programmes of industrialised countries as it raised its forecast for global oil demand next year.
In the US, a federal biomass programme introduced this month "pays farmers to experiment with energy" at an annual cost to taxpayers of about US$500 million (Dh1.83 billion), the oil exporters group said in its November oil market report.
"Although these government subsidies are helping the biofuel industry, the negative effect on the environment is vast and the programmes place a burden on the public budget," OPEC said.
The biofuel mandates of the Organisation for Economic Co-operation and Development (OECD) "negatively affect both South America's and Asia's environment as most of the supply is imported from these two regions", OPEC said.
"Deforestation is a major consequence resulting from the biofuel industry."
The criticisms underscore growing concern about market security within the organisation, which pumps 40 per cent of the world's crude.
In the report released yesterday, OPEC predicted demand for its oil next year would reach 29.2 million barrels per day (bpd) next year, up 1.4 per cent from the 28.8 million bpd projected for this year.
The new forecast represents an upward revision of 400,000 bpd from the organisation's previous monthly assessment.
But OPEC reported its output last month reached a record 29.3 million bpd for the year so far.
Global oil demand was forecast to increase by 1.17 million bpd next year to 86.95 million bpd after minor upward revisions in projections for demand growth this year and next, due to modestly improved expectations for economic recovery.
The economic outlook was underpinned by better manufacturing expansion than expected in industrialised countries in response to government stimuli.
"The improved outlook for OECD demand is a key factor behind this adjustment," OPEC said. "However, given the higher baseline, oil demand growth is expected to be lower than in the current year."
The group noted that domestic oil consumption in Saudi Arabia, the largest OPEC oil exporter, had increased by 7.3 per cent in the past 10 months to reach 2.2 million bpd last month, accounting for more than a quarter of Saudi output.
Iran's oil consumption has fallen 3.3 per cent so far this year, mainly due to an 18 per cent reduction in petrol demand as Tehran cut fuel subsidies after new rounds of UN, US and EU sanctions.
OPEC increased its projection for Chinese oil demand this year, saying that "China has been actively filling its oil storage" and car sales were surging.
A "massive" increase in oil use in Asia's biggest economy had occurred despite government efforts to curb energy use, and China was now the largest car market in the world, the group said.
Highlighting the high oil inventory levels that continue to overhang the global oil market, however, OPEC noted the recent shutdown of as much as 60 per cent of French refining capacity due to industrial action had only moderately affected oil-product prices.
"Only a few years ago, such a considerable and prolonged outage would have had a strong impact both on product and crude prices," OPEC said.
"The refinery outages in France have demonstrated that the high level of idle refining capacity, along with the overhang in product inventories both onshore and offshore, provide an ample cushion to cover such a large and prolonged disruption.
It continued that "looking ahead to the coming winter season, circumstances in the downstream and for both crude and product inventories are not expected to change considerably. Overcapacity in the refining sector is likely to persist."
Updated: November 12, 2010 04:00 AM